Icelandair adheres to the goals of the International Air Transport Association (IATA) to address the global challenge of climate change. In October 2021, IATA made an announcement regarding the global air transport industry aiming to achieve net-zero carbon emissions by 2050. This commitment aligns with the Paris Agreement goal to limit global warming to 1.5°C. This is expected to be achievable through a combination of measures and collective effort of all stakeholders.

From spring 2021, the number of flights began to increase again in line with progress of vaccinations and lifting of travel restrictions. The Boeing 737 MAX aircraft were reintroduced to service during the year. The MAX aircraft are of a new generation of more environmentally friendly aircraft and therefore an important part of reducing carbon emissions in Icelandair's operation. The implementation of the MAX aircraft resulted in better fuel efficiency numbers in 2021 than in 2019 despite a lower load factor in the passenger network of 65.2% for the full year 2021 compared to an 82% load factor in 2019.

The total emissions from aviation in 2021 were 484,955 tCO2e, a reduction of 64% compared to 2019. From Q2 2021 emissions from the route network includes domestic and regional routes.

The emissions from Ground vehicles in 2021 were 952 tCO2e, a reduction of 42% from 2019.This number includes data from vehicles and equipment directly linked to the airport. It does not include company cars.

Our goals of reducing emissions are in line with the airline industry’s goals. Facing a transition that is challenging we have in addition now set new specific targets for reducing emissions by 2030. Reaching these goals will require continued efforts through a combination of measures, such as fleet renewal, operational improvements, the implementation of sustainable aviation fuels as well as carbon offsetting. The implementation of the Boeing 737 MAX aircrafts into our fleet is an important contributor to reducing our emissions, in addition to the operational efficiencies that they bring to our business.

Demand for cargo remained strong in 2021 and the Company kept the focus on meeting it, protecting important export from Iceland and importing necessities to the country. A key focus area in our cargo services is ensuring efficient transport of fresh Icelandic seafood and thus supporting important export revenue generation in Iceland.

Utilizing our strong route network, we work closely with our partners to deliver fresh seafood products that have a low carbon footprint compared to other protein sources and can be ready on consumers’ plates in diverse markets within 36 hours of being caught.

Icelandair has offered passengers the option to offset the carbon footprint of their air travel since September 2019. Even though the Covid pandemic still had an impact on traveling, passengers still participated in the compensation of their carbon footprint and contributed to the planting of around 5000 trees during the year. The carbon offset program was devised in co-operation with Klappir Green Solutions and Kolvidur – the Iceland Carbon Fund to cultivate forests in Iceland. Icelandair offsets all employee business travel.

Grænvangur, Green by Iceland, is a public-private partnership set up to promote green climate solutions. Participants are all working towards solutions for a more sustainable world. In Iceland, many challenges have been addressed by utilizing the country's natural resources. Iceland's electricity production comes from renewable energy sources and houses get heating from geothermal district heating. Icelandic expertise can potentially help other countries to reduce their carbon emissions.

In 2021, Icelandair became one of Grænvangur's sponsors.